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Weekly Market Review

Weekly market analysis written by NDWC staff that highlights major factors that affect market prices for spring wheat and durum.

May 18, 2012

Hard Red Spring Wheat
Wheat futures were extremely strong this week, with July Minneapolis futures closing over 65 cents higher to reach $7.92. Current cash prices around the state range from $7.40 to $8.00. The rally in wheat prices was due primarily to dry conditions in the U.S. HRW region and around the world. Hot, dry conditions in areas of Kansas and other HRW states are adversely affecting final yield potential in the final weeks of crop development. Winter wheat production will likely fall below USDA's estimate earlier this month. Also, hot, dry conditions have continued in the Black Sea region which will adversely affect wheat production and now there are concerns in Australia. Planting of the spring wheat crop should near completion this week as 94 percent of the U.S. crop had been planted as of Sunday.

Durum prices continue to drop in North Dakota. Most cash bids are now in the $6.50 to $7.25 range. Planting of the Northern crop is well ahead of average. In North Dakota 76 percent of the crop had been planted, compared to only 2 percent a year ago. In Montana, 71 percent of the crop has been planted. Emergence is also well ahead of average. The Canadian crop will likely be larger this year, but crops in Europe and Morocco will likely be smaller. USDA reported 334,000 bushels of U.S. durum sales this week to Algeria and Venezuela, but exports are about half of what they were a year ago.

May 11, 2012

Hard Red Spring Wheat
It was another down week for spring wheat futures, with the July Minneapolis futures closing at $7.26. Good planting pace and indications of a larger U.S. wheat crop are factors pressuring prices. On Thursday, USDA released their first estimates for 2012-13 wheat production. World wheat production is estimated at 25 billion bushels, down from last year, but still the fourth highest on record. However, usage is expected to outpace production which will lead to a decline in stocks. U.S. wheat production is forecast 10 percent higher at 2.2 billion bushels. Acreage is higher, but yields are also expected to be higher. The winter wheat estimate came in at 1.7 billion bushels, slightly higher than expected. USDA doesn't release spring wheat and durum production estimates until later, but using the all wheat and winter wheat numbers, it can be deciphered that they are expecting slightly higher production for those classes combined. Both domestic and export use for U.S. wheat is pegged higher for 2012-13 which will result in lower stock levels. Planting of the spring wheat crop is 84 percent complete, compared to 50 percent on average and only 20 percent last year.

Durum prices continue to slide with current cash bids ranging from $7.00 to $7.30. New crop prices are in a similar range indicating there is currently no concern about available supplies. The North Dakota crop is 55 percent planted compared to only 5 percent a year ago. Recent rains have slowed down progress in areas. Planting is also going well in Montana where 65 percent of the crop has been planted. In its crop production report this week, USDA estimated the Desert Durum crop at 26 million bushels, higher than last year's production of 20.5 million bushels and above earlier expectations. Harvest will likely start by the end of the month. Current export sales stand at 18 million bushels, making it highly unlikely that they will reach USDA's estimate of 25 million bushels.